The record-busting budget stalemate heated up last week when the Legislature passed a budget proposal that as EdCal went to press Gov. Arnold Schwarzenegger said he would veto. The budget proposal did not include new taxes and relied heavily on borrowing.
Essentially, this budget proposal was a win for the Republicans. Sen. President Pro Tem Don Perata relented to the Republican caucus’ demand to design a budget that did not include any new or higher taxes. However, the budget package included a variety of components, including the closure of tax loopholes, accelerating tax collections and budget reform.
Immediately, the Education Coalition put out a statement calling on the governor to veto the new proposal, as it failed to provide a reasonable balance of cuts and increased revenues.
“The damaging proposal was passed nearly 11 weeks after it was due, in the dark of night, with no substantive details about the human cost of the numbers released to the people of California, and still didn’t address our state’s most pressing needs or create real, long-term solutions,” the statement read. “Voters have said resoundingly in statewide polls that borrowing is an unacceptable approach to solving the state’s budget crisis. It is therefore unacceptable to support a budget that relies on gimmicks and leaves our schools deeper in the hole next year.
“The ‘get out of town budget’ shortchanges schools by an additional $3 billion next year, ensuring that per-pupil spending in California remains among the very worst in the country. And instead of closing corporate tax loopholes, it creates new and bigger ones that will drain more funds from students and schools. This budget would also give new mid-year authority to the governor so that schools could be forced to make cuts in the middle of the school year. In addition, by increasing the ‘rainy day’ reserve beyond current law, the budget undermines the state’s voter-approved minimum school funding guarantee – Proposition 98.”
Superintendent of Public Instruction Jack O’Connell also issued a statement urging the governor to reject the budget proposal.
“If this proposal is enacted, it simply pushes important decisions about how to responsibly fund our state’s priorities off into the future,” O’Connell said. “A long-term solution that protects public education will require permanent and ongoing revenue increases.
O’Connell noted that schools are already struggling as they face rising costs for supplies, food, transportation and employee health care. In addition, the ongoing budget stalemate has already had an adverse impact on schools.
“Without a budget, California cannot fund critically needed child care programs, community colleges, and many categorical programs at our schools,” O’Connell said. “The withholding of these funds has deeply impacted schools and businesses and put real people’s personal finances in jeopardy. California needs a responsible and fair budget – one that provides for the state’s most vulnerable and promotes economic viability. Our public schools are critical avenues to serve both.”
Gov. Schwarzenegger held a press conference after the budget proposal was passed by the Legislature and announced he intended to veto it. He criticized the proposal as just pushing the issue down the road, making the situation worse.
“It takes billions of dollars from the paychecks of hardworking families just to get us through this year, while we are pushing big deficits into the next year,” Schwarzenegger said. “For small businesses trying to meet a payroll, the government would force you to pay more of your taxes early so we could meet our payroll. And worst of all, this budget includes a flawed rainy day fund that will do nothing to stop this from happening again and again and again.”
The governor also said if his veto is overridden by the Legislature that could mean bad news for schools.
“If the legislators override my veto – which I expect them to do – it will guarantee that we will have to make huge cuts in education next year, or we will have huge tax increases next year,” Schwarzenegger said.
The basics of the budget proposal from the Legislature as it pertains to education is this: The budget proposal funds Proposition 98 at $58.1 billion. This funding level is higher than the May Revise by $1.3 billion but lower than the Legislative Conference Committee proposal by $800 million. In addition, the budget includes a modest cost-of-living adjustment of 0.6 percent for revenue limits, but not for any categorical programs.
It also includes a lottery securitization proposal for $6 billion. The changes to the lottery include excluding education from receiving lottery funds and instead adding the $1.2 billion of lottery proceeds to the base of Prop. 98. Education will be taken completely out of the lottery beginning in 2009-10 and the $1.2 billion will be included in school district revenue limits.
One of the big objections Schwarz-enegger had to the proposal was the rainy day fund it set up. Although the governor wanted such a fund, the Legislature set the fund up so that it could be raided by the Legislature for any reason by a two-thirds vote. Schwarzenegger wants the fund set up so that it can only be accessed when the economy takes a dive.